Macau Growth Affected by Chinese Communist Party Leadership Change: Wall Street Transcript Interview with John Kempf, Analyst at the Research Division of RBC Capital Markets

67 WALL STREET, New York - December 5, 2012 - The Wall Street Transcript has just published its Gaming and Leisure Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

In the following excerpt from the Gaming and Leisure Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Would you start with a brief overview of your coverage universe?

Mr. Kempf: We are covering and publishing on both equity and high-yield gaming companies. On the equity side, it's mostly the 10 gaming operators. In high yield, we're more on the gaming side than on lodging and leisure.

TWST: What are some of the big themes you're focusing on within the space right now?

Mr. Kempf: Right now, it's Macau and what's happening there. The numbers have dropped significantly from their high growth rate in 2009, 2010 and 2011. We are focusing on the drop, what it means, and as we look to our forecast for next year, how that's going to play out.

TWST: It's been an interesting year for the stocks with exposure to Macau and Asia. How do you sum up what's going on this year? And how do you formulate a thesis for 2013?

Mr. Kempf: We've seen a slowdown in Macau, mostly on the VIP side. The mass market continues to grow at a very healthy pace, over 20%. The volumes in VIP have been down recently for a bunch of reasons. We believe, first, most of the VIP play is going to come from provinces where there is a lot of export business. We think the owners of those businesses have suffered a little bit as the general worldwide economy is down. As long as exports from China to Europe and the U.S. are down double digits, that's going to have an impact on the business owners and their play in Macau.

We also think the changeover for the Communist party is playing a role there. We think that some of the people who play there are close to the Communist party or members of the party, and they have probably gone away until this whole sort of situation has turned over. Once it starts to play out, and it's beginning to do that, we think that business will start coming back in 2013.

All that said, the real key is...

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